What's going on with the US manufacturing sector? The latest data caught everyone off guard as soon as it was released. In December 2025, the US Manufacturing Purchasing Managers' Index (PMI) fell from 48.2 in November to 47.9, hitting the lowest point since October 2024. It's important to note that the growth contraction line is at 50; below 50 indicates contraction, meaning the manufacturing sector has been struggling in difficulty for 10 consecutive months.

New orders have been declining, while costs are soaring. This contradictory situation is directly reflected in the data. When the Institute for Supply Management released this report, the market had expected the PMI to stay around 48.4, but the actual result was worse than expected. Manufacturing accounts for 10.1% of the US economy, and its poor performance indicates significant issues.

Interestingly, although the PMI has fallen considerably, it still remains above the critical 42.3 line. Historically, as long as it stays above this line, the overall economy is usually still in expansion. In fact, the US economy's annualized growth rate in the third quarter of last year reached 4.3%, which is indeed impressive.

But where does this contradictory phenomenon originate? The ongoing pressure from tariff policies has never eased. The rising costs caused by trade frictions and shrinking corporate orders create a vicious cycle that is vividly reflected in manufacturing. Although analysts still have expectations for the economic outlook, the performance of this "economic barometer" truly warrants market participants to pay closer attention.